The growth of for-profit and system-affiliated health care facilities is widely anticipated to have important consequences for the delivery of health services. Much of the research into the implications of these ongoing institutional changes has been based on the performance of facilities operating in a relatively uncompetitive environment under cost-based reimbursement. It may therefore not be applicable to a health care system in which competition and prospective payment are becoming increasingly important. To better understand the impact of these institutional changes, we propose to study the effects of the growth of systems and proprietary ownership on HMOs. The HMO industry seems a useful testing ground for several reasons. First, the number of for-profit and system-affiliated plans has grown rapidly in recent years. Second, because HMOs are pre-paid and increasingly in active competition with one another, the effects of these institutional factors will be more like those which will be common in the health care system in the future. Finally, HMOs have grown in part as the result of federal policies intended to promote competition among plans and to make pre-paid care more accessible to both the privately insured and enrollees in Medicare and Medicaid. It is possible, however, that these ongoing institutional changes will create barriers to these policy goals. The study proposed here has two basic objectives: first, to assess the effects of system control and investor ownership in HMOs on delivery of services in terms of costs and access and second, to identify the ways in which changing institutional characteristics may affect the nature and extent of competition among HMOs. To make these assessments, a longitudinal data base will be constructed from existing secondary data and will incorporate information on all HMOs operating between 1980 and 1986, as well as data on the characteristics of the community in which the HMO is located.